Rhode Island Issues Report on New Regulatory Framework to Modernize the Grid

Rhode Island was already among the top ten most active states in terms of grid modernization efforts in the third quarter of 2017, and it is now poised to tackle the issue more broadly.  Earlier this month, Rhode Island state agencies issued a grid modernization report entitled Power Sector Transformation: Phase One Report to Governor Gina M. Raimondo.  The report is the result of an inter-agency team made up of staff from the state’s Division of Public Utilities and Carriers, Office of Energy Resources, and Public Utilities Commission.  These agencies were directed by Rhode Island’s governor to develop a more dynamic regulatory framework to enable the state and its major investor-owned utility, National Grid, to advance a cleaner, more affordable, and reliable energy system for the twenty-first century.

The report identifies four overarching recommendations for regulatory reform.  First, the agencies recommend shifting the utility business model to one that relies more upon performance-based compensation and less upon rewarding investments.  This would include, among other things, creating a multi-year rate plan and budget with a revenue cap to encourage cost savings and developing new value-streams associated with a modernized grid (such as the communications network that supports advanced meters).

Second, the agencies recommend the deployment of advanced meters.  The advanced meter roll-out plan must include a proposal to provide third-party access to the advanced meter platform, including plans for how to address privacy and cybersecurity concerns.  To reduce the cost of deploying advanced meters, the utility should share the necessary communication infrastructure through partnerships.

Third, the agencies recommend that the utility begin filing the Infrastructure, Safety, and Reliability Plan and System Reliability Procurement Plan as two linked planning documents each year.  These synchronized plans should include details about distribution system planning forecasts and a stakeholder engagement plan.  The report also suggests that state regulators and policymakers should develop a strategy to compensate the value of distributed energy resources based, in part, on their locations on the distribution system.

Finally, the agencies recommend that the utility advance electrification into new economic sectors that are beneficial to system efficiency and greenhouse gas emission reductions.  This should include electricity rates designed to encourage electric vehicle users to charge their vehicles during non-peak demand times and make their batteries available to the grid.  The utility should also pursue electric heating proposals consistent with the Rhode Island Public Utility Commission’s white paper on beneficial electrification.

The report recognizes that implementation of these changes will take time and occur through a variety of regulatory vehicles.  However, it notes several opportunities in the coming year for Rhode Island to begin pursuing these reforms, such as National Grid’s distribution rate case filing expected next month, as well as the next Infrastructure, Safety, and Reliability Plan, System Reliability Procurement Plan, and Energy Efficiency Plans.

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